Brazil is a veritable diamond in the rough for foreign and local investors alike. Firms are investing in new centers of technology, fabrication, and worker training to alleviate the country’s skills and infrastructure difficulties.
Brazil is very much the place to be at the moment, and not just for its fantastic beaches and anything-goes Carnival. Multinational companies are flocking to the South American country to reap the benefits of emerging industries such as shipbuilding, ship repair, transportation, and training.
Even with investment, Brazil is not immune to the problems the oil and gas industry faces globally, such as a lack of skilled workers and insufficient infrastructure to support the country’s all-too-important oil and gas resource development. Not helping these headaches are recent changes to local content requirements, require Brazilian projects to contain a minimum of 65% local content, including services, people and products.
Despite these problems, Brazil’s pre-salt remains of unending interest. Finally helping to satisfy this hunger, Brazil’s National Petroleum Agency (ANP) is gearing up for its latest licensing round. Beginning later this month, 71 companies have already entered the ring including majors such as ExxonMobil, BP plc, Chevron Corp. and Brazilian based companies such as state firm Petrobras, and independents HRT and OGX.
Even with foreign investment, Petrobras is the majority of the market, and many service and vessel operating companies find themselves dependent upon contracts from the state-owned firm.
Audrey Leon reports from Rio de Janeiro for the scoop on latest project and facilities updates in the region.
Petrobras says its own E&P investments for the 2013-2017 period will be US$147.5 billion. Petrobras is focusing its efforts on four main projects: Sapinhoa, Roncador, Baleia Azul, and Papa Terra.
The company is currently pumping 300,000 b/d of oil combined from its Campos and Santos pre-salt basins. It took seven years to reach record production with 17 wells.
By all accounts 2013 is a busy year for Petrobras in the pre-salt with three production systems coming onstream and a fourth to follow this month.
Petrobras connected the FPSO Cidade de São Pauloto the Sapinhoa field in the Santos Basin in January and quickly followed suit with the FPSO Cidade de São Vicentein Sapinhoa Norte in February.
Also in February, Petrobras connected the FPSO Cidade de Itajaí, which arrived at the field in December, to well 9-SPS-88 at the Bauna field in the Southern Santos Basin. Petrobras estimates that the well can produce up to 12,000 b/d. The company will eventually connect 10 more wells - five production, four water injection, and one gas injection - to the FPSO, reaching peak production by August.
On the horizon
Petrobas says all three units will add an additional 200,000 b/d to its production capacity.
Of course, Petrobras is not yet done. The company expects to install the FPSO Cidade de Paraty to the Northeast area of the Lula field in the Santos pre-salt. The FPSO has a capacity to process 120,000 b/d and 5 million m3/d of gas.
Petrobras aims to pass 1 million b/d of oil production by 2017, and it intends to do that by installing an additional 11 new platforms from 2014-2016. Of those 11, 10 will be located in the Santos Basin. Currently this basin accounts for 43% of Petrobras’ pre-salt production, approximately 129,000 b/d.
One of the next FPSOs to be installed in the Northern Sapinhoa field, in the Santos Basin, is the FPSO Cidade de Ilhabela. The unit is owned by a shareholding consortium comprised of SBM Offshore, Queiroz Galvão Óleo e Gás (QGOG) and Mitsubishi Corp., which also owns FPSO Cidade de Paraty. The FPSO’s hull is being converted at CSSC Shipyard in Guangzhou, China,from a 400m long and 70m wide tank vessel.
Ten topsides modules for the FPSO are under construction at SBM Offshore’s BRASA yard in Niteroi, which is surrounded by Guanabara Bay. The BRASA yard is a 50/50 joint venture between SBM Offshore and Synergy. The company refurbished the yard including warehouses, administrative offices, construction facilities and rebuilding of an access bridge in 2012. SBM Offshore says the yard was the company’s solution to solve bottlenecks in Brazil. In addition to the yard construction site, it boasts a crane barge (the Pelicano-1) and integration quayside.
The topside facilities, under construction now, will process 150,000 b/d of production fluids, associated gas treatment for 6 million Sm3/d with compression and carbon dioxide removal, hydrogen sulphide removal, and a water injection facility for 180,00 b/d. Integration is expected by April 2014, with first production to follow in September.
“With FPSO P-57, we needed 65% local content, and we needed to have a local organization that could handle buying equipment and construction operations,” says Phillipe Levy, managing director of SBM Offshore Brazil. “Once Brasfels became backed up, we needed to create our own solution.”
Levy says it wasn’t politically correct to build anywhere else but Brazil due to local content rules. He says FPSO Cidade de Ilhabela will have 65% local content, double that of what was used on FPSOs before P-57 was constructed.
These days SBM Offshore’s new focus is FPSOs, Levy says.
“Santos pre-salt is very complex,” he says. “We’re talking about very challenging projects, and we like that.”
That attitude must have impressed Petrobras because the company awarded SBM Offshore an LOI for two additional FPSOs to serve the Lula field at the end of March. SBM Offshore’s scope of work will include the conversion of two double hull sister vessels. The FPSOs will have a storage capacity of 1.6 million barrels each. The topside facilities of each FPSO weigh approximately 22,000 tons and both will be able to produce 150,000 b/d of well fluids and have associated gas treatment capacity of 6,000,000 Sm3/d. The water injection capacity of the FPSOs will be 200,000 b/d each.
Chevron wins Frade restart
Chevron’s luck in Brazil is beginning to change. The country’s National Petroleum Agency (ANP) authorized the supermajor to restart production at its troubled Frade field last month, allowing Chevron to produce from four wells for a period of 12 months. As OE goes to press, Chevron has not confirmed Frade’s startup date.
Production at the ultra-deepwater Frade field, located in the Northern Campos basin, has been suspended since November 2011 when oil seeps were discovered in the area. Approximately 2400 to 3700 barrels of oil were spilled into the Atlantic Ocean during the incident.
The greenlight from ANP comes just months after a Brazilian judge dropped criminal charges against Chevron and Transocean related to the incident. While the criminal portion of Chevron of Brazilian legal troubles are put to bed, a civil suits are still pending.
In early March, Petrobras encountered 28°API oil at its 3-RJS-706 well, located in block BMS-11 of the Iara area, in the Santos Basin. The well is 226km off the coast of Rio de Janeiro and 6km from the discovery well at depth of 2,197m.
In February, Petrobras announced two oil discoveries. The first at its Florim well (1-BRSA-1116-RJS), which encountered 29° API oil. Florim, in the Santos Basin pre-salt, was drilled to a depth of 5,498m in water depths of 2,009m. The well sits 206km off the coast of Rio de Janeiro state. The second discovery came at Petrobras 1-SPS-98 (Sagitário) well. The company found 31° API oil at the Santos Basin pre-salt well. Sagitáriois the first well to be drilled in the BM-S-50 block and is located 194km off the coast of the state of São Paulo in 1,871m of water.
In January, Petrobras encountered good quality oil in the Tupi South area of the Santos Basin pre-salt. Petrobras said the well encountered reservoirs of excellent quality in carbonate rocks below the salt layer. Preliminary tests indicate that Tupi South could be linked to Lula field. Tupi South is located south of Lula field 302km off the coast of Rio de Janeiro at a water depth of 2,188m.
In December, Petrobras touted a fourth oil discovery, this time in the Muriú well, in the ultra-deepwaters of the Sergipe-Algoas basin, 85km off the coast of Aracaju. Tests confirmed the presence of a 67m light oil column in the Calumbi formation of the Muriú well.
In October, Petrobrasidentified a 176m oil column at the Jupiter Nordeste extension well, located 7.5km from the main Jupiter discovery well inside ultra-deepwater Block BM-S-24. The well sits 275km off the coast of Rio de Janeiro.
Australian explorer Karoon Oil & Gas along with partner Pacific Rubiales announced the discovery of a 25m light oil column at their Kangaroo-1 exploration well on Block S-M-1101 in the Santos Basin. The well intersected the Eocene reservoir section 300m down dip from the trap crest. Karoon estimates that the entire trap holds a potential gross hydrocarbon column of approximately 350m.
In a follow up to its 2009 discovery, BP completed flow tests on the Itaipu-1A pre-salt well is located in block BM-C-32 of the Campos Basin. The well test achieved flow rates of up to 5,600 b/d of oil for 32 hours through a 40/64 choke from a limited perforated interval in late March. BP operates BM-C-32 with 40% equity. Its partners include Anadarko Petroleum Corp. (33.3%) and Maersk Energia Ltda (26.7%)
Setting up shop
Several large firms are choosing to build brand new facilities around Rio de Janeiro to both assist in satisfying rigid local content requirements as well as to stay close to clients in the Latin American region.
BG Group, a multinational firm that is currently exploring off Brazil’s coast, plans to invest US$1.5-$2 billion in Brazil, including constructing a new global technology center that will serve all of its research and development activities worldwide.
The center will be located near Petrobras’ CENPES technology park on Ilha do Fundão near the Federal University of Rio de Janeiro. BG Group joins neighbors such as equipment and services providers Baker Hughes, FMC Technologies, and Schlumberger, who have all chosen to create technology centers on the island.
Construction began on BG’s facility in early March and is expected to be completed by mid-2014. BG says the decision to place its global technology center in Brazil reflects its on-going investment in the country as it develops oil and gas reserves offshore in the pre-salt Santos Basin.
Finland’s Wärtsilä announced plans for a new €20 million manufacturing facility that will span 4000 sq m and boasts its own waterfront and quay. Construction on the plant commenced last month and is scheduled for completion in mid-2014. The facility will be located 300km north of Rio de Janeiro in the Açu Superport Industrial Complex in São João da Barra.
Wärtsilä’s CEO Björn Rosengren announced back in March that the decision to build grew out of a need to be close to the company’s customers.
“Our presence in Brazil is now further strengthened to respond to the ongoing demand for Wärtsilä power solutions, and to meet the set local content requirements,” he says.
Wärtsilä’s facility will handle the assembly and testing of the company’s generating sets and propulsion products. Wärtsilä plans to hire some 100 workers.
Acteon companies InterMoor and Seatronics are also constructing new facilities in Brazil. InterMoor plans to join Wärtsilä by building its own service base at the Açu Superport Industrial Complex north of Rio. Construction started last month at a 52,000 sq m plot at the right bank of the terminal’s inland channel. InterMoor has not said when construction is expected to be completed on the project.
Aberdeen-based subsea marine equipment rental firm Seatronics completed the startup phase of its new facility in Macaé, Rio de Janeiro, earlier this year. The center will serve as an office, workshop and warehouse facility for sales, rental, engineering, and cable molding activities.
Training facility aims to lessen local content woes
Maersk Training, a division of Maersk Group, is set to open a new training facility in Barra da Tijuca on Rio de Janeiro's southwest side next month. Maersk says its goal is to deliver the necessary training to operate in Brazil as an oil company, rig or vessel owner or operator.
One issue of frequent concern to many companies operating in Brazil is local content requirements. The global oil and gas industry as a whole is struggling to find enough properly skilled workers, but in Brazil the problems are exacerbated by lack of experience and language issues.
“There is a shortage of highly-skilled labor, and even more so in terms of very specific skills such as those we are looking for in technical instructors,” says Hans Dürke Bloch-Kjaer, Managing Director at Maersk Training Brasil.
Bloch-Kjaer says language barriers make it difficult to find qualified instructors for the training center.
“The working language of Maersk is English, and we expect to have at least some non-Brazilians participating in our courses, and we require all our instructors to be able to communicate fairly fluently in English as well as Portuguese,” he says. “Unfortunately, highly-skilled workers in Brazil tend to not need English skills to find good jobs, and don’t feel a real need to learn a second language.
“Many otherwise excellent candidates have been rejected just because they don’t speak English.”
Bloch-Kjaer usually has to match offshore salaries just to get the high-skilled workers to join as trainers. Bloch-Kjaer noted, jokingly, that he is part of the problem when it comes to poaching in the industry.
“When you find these people who speak English and have knowledge, they are very expensive,” he says.
Despite the challenges, the Barra da Tijuca facility currently employs 15 local instructors and one senior Danish instructor. By the end of the year Bloch-Kjaer expects to have 30 instructors. The inaugural session, which will have a maximum of six native Brazilian students, will feature a course on Advanced Dynamic Positioning using Maersk’s DP simulator, which was supplied by Kongsberg. In addition to DP, the facility will be able to conduct drilling and bridge simulations.
Maersk will also offer public short courses, company-sponsored trainee programs and tailor-made services at the Barra da Tijuca center. Maersk says its training program with will count toward investment in local content requirements. OE